Attorney Fees in Saudi Arabia: Compensation in a Commercial Judicial Precedent

Introductory overview

Attorney fees in Saudi Arabia are a recurring issue in commercial disputes, especially when a creditor is forced to litigate because a debtor delays payment of an already-established debt. The topic matters greatly for companies, traders, and investors involved in high-value transactions who regularly resort to the courts to recover receivables and enforce contracts.

This article analyses a judicial precedent issued by the Commercial Court in Riyadh, where the debtor was ordered to compensate the creditor for part of the attorney fees on the basis of delay in performance, and the judgment was upheld on appeal. The analysis clarifies the legal basis for compensation for litigation damage and attorney fees in Saudi law, the criteria applied by the court when assessing such compensation, and the practical lessons for companies and in-house legal departments.

What will you read in this article?

• The legal framework governing compensation for attorney fees in Saudi Arabia and litigation-related damage.
• A concise presentation of the facts of the commercial lawsuit in which attorney fees were claimed as damages.
• The judicial rule derived from the judgment of the Commercial Court and the appellate court.
• Practical implications of this ruling for companies, traders, and in-house legal departments when drafting contracts and planning litigation strategy.
• A brief summary and key data of the judgment as a reference in similar cases.

About the Author

Attorney and arbitrator Mohammed Almuzayen, with more than fifteen years of experience, specializes in construction disputes, infrastructure and engineering contracts, government contracts, and franchise agreements. He holds a bachelor’s degree in law from King Saud University in Riyadh (2009) and has extensive practical experience through his work with major national companies, including Al-Majdouie Group, Binzagr Company, United Mining Investments Company, Al-Mawarid Joint Stock Company (listed), and Golden Petroleum Investment Company.

Question 1: What is the legal framework for compensating attorney fees and litigation damage in Saudi Arabia?

1. Sharia basis for liability for harm

Compensation for attorney fees and litigation damage rests first on general Sharia rules, most notably:

• The maxim: “Harm must be removed”.
• The maxim: “Harm entails liability”.

Classical jurists such as Ibn Taymiyyah and Al-Mardawi stated that when a solvent debtor procrastinates in paying a due right until the creditor is forced to complain and litigate, what the creditor spends because of that procrastination is borne by the unjust debtor, provided such expenses are customary and reasonable.

Saudi courts rely on this principle to treat part of the creditor’s attorney fees in Saudi Arabia as compensable damage where delay and abuse of right are proven.

2. Jurisdiction of the Commercial Court over pre-execution delay

Article 73(3) of the Law of Procedure before Sharia Courts and its Implementing Regulations provides that the court which issued the original judgment has jurisdiction over compensation claims for damage arising from delay before the creditor files an execution request. Damage occurring after that falls within the jurisdiction of enforcement courts.

In the precedent under review, the Fourth Circuit of the Commercial Court in Riyadh applied this rule and heard a separate claim for compensation of attorney fees on the basis that they constituted damage caused by the defendant’s delay in fulfilling the original commercial obligation.

3. Rules on litigation costs and attorney fees

The Implementing Regulations of the Commercial Courts Law (including Article 164 as cited in the defense) require judgments on the merits to deal with requests for compensation for material and moral damage, including litigation costs.

In this case, the defendant argued that because the claimant had not requested attorney fees in the original lawsuit, he could not bring a later, independent action for them. The court did not accept an absolute “forfeiture” theory. Instead, it considered that once procrastination and resulting damage were established, the creditor could seek reasonable compensation for attorney fees before the same circuit that rendered the original judgment, in line with procedural rules and general liability principles.

4. Custom as a benchmark for assessing fees

Saudi courts also rely on the maxim that “custom is authoritative”. In an earlier appellate decision, the Commercial Court of Appeal in Dammam indicated that attorney fees in commercial disputes are often assessed at 10–15% of the claim value.

The court in the Riyadh precedent followed this reasoning and fixed compensation at 10% of the amount awarded in the original case, drawing on:

• Sharia maxims (custom is authoritative),
• Prior judicial practice,
• Market practice for legal services.

5. Relationship with the Law of Advocacy

Article 26 of the Law of Advocacy provides that attorney fees and payment methods are determined by agreement between lawyer and client; if there is no agreement, or it is invalid or disputed, the court that heard the case shall set the fees proportionate to the effort and benefit.

In the case at hand, there was a fee agreement between the claimant and his lawyer. The Commercial Court did not scrutinise its validity in depth. Rather, it focused on the defendant’s liability for part of those fees as damage caused by procrastination and determined that part to be 10% of the amount awarded in the original judgment.

Legal Consultation (CTA)

For specialized legal advice on attorney fees in Saudi Arabia, compensation for litigation damage, or the viability of bringing an independent compensation claim after a commercial judgment, you may contact the Law Office of Arbitrator and Attorney Mohammed Almuzayen. The office can assess your contractual and evidentiary position and recommend an optimal strategy in light of current Saudi laws and judicial practice.

Question 2: What are the facts of this judicial precedent and its key elements?

1. Parties and nature of the dispute

• Claimant: A trader in livestock (the creditor).
• Defendant: A trader dealing in livestock (the debtor).
• Courts: Commercial Court in Riyadh – Fourth Circuit (first instance), and First Circuit of the Commercial Court of Appeal in Riyadh (appeal).
• Type of case: Claim for compensation for litigation damage and attorney fees arising from a previous commercial case concerning the sale price of sheep.

2. The original lawsuit – basis for the compensation claim

The claimant had earlier filed commercial case no. 42802647 before the Riyadh Commercial Court, seeking payment of SAR 2,353,550 as the price of sheep sold to the defendant.

That case ended with a final judgment (no. 429193427, dated 15/06/1442 AH) ordering the defendant to pay the entire amount. The proceedings showed that:

• The defendant denied the claimant’s entitlement to the full amount,
• Acknowledged only SAR 889,000, and
• Continued to dispute the rest until the court confirmed the claimant’s entitlement to the full invoice amount.

These facts formed the basis for alleging delay and bad-faith refusal to pay.

3. Subject of the current lawsuit

After the original judgment became final, the claimant filed a new lawsuit before the same circuit requesting:

• An order requiring the defendant to compensate him for attorney fees incurred in the original case, on the grounds that the defendant delayed payment, forced him to litigate, and denied the debt until a final judgment was issued.
• The claimant quantified these fees at 15% of the amount awarded in the original lawsuit, i.e. approximately SAR 353,032.50.

4. Main arguments for the claimant

The claimant’s attorney advanced several key arguments:

1. Procrastination and abuse of right
   The defendant had delayed payment of a due commercial debt since approximately 1434 AH, acknowledged only part of it, and was ultimately ordered to pay the full amount; this demonstrated unjustified denial and procrastination.
2. Sharia basis for compensation
   Reliance on classical juristic statements that a procrastinating debtor must bear what the creditor spends because of the complaint and litigation, applying the maxim “harm entails liability”.
3. Procedural basis for jurisdiction
   Reliance on Article 73(3) of the Law of Procedure before Sharia Courts to confirm the competence of the same circuit that issued the original judgment to hear a compensation claim for delay-related damage prior to execution.
4. Custom in estimating attorney fees
   Reference to an appellate precedent stating that attorney fees are typically between 10% and 15% of the claim value, and that what is known by custom is as if stipulated in a contract.
5. Proof that fees were actually paid
   Explanation that the former lawyer received the amount awarded in the original case by cheque, then transferred SAR 2,000,000 to the claimant and withheld the remainder as fees. The amount claimed corresponded to what had in fact been withheld.

5. Main arguments for the defendant

The defendant’s attorney raised, among others, the following defenses:

1. Non-liability for the fee agreement
   The fee agreement is a private contract between the claimant and his lawyer and does not bind the defendant, who should not bear its consequences.
2. Denial of procrastination
   The defendant argued that he had acknowledged SAR 889,000 and that the dispute concerned only the remaining amount, so there was no wrongful procrastination.
3. Reliance on procedural texts regarding litigation costs
   Argument that the Implementing Regulations require any request for compensation for attorney fees to be joined with the original claim; because the claimant failed to do so, he could not bring a separate action.
4. Challenging the fee agreement
   Allegation that the contract contained erasures and amendments in the fee clause, and request for production of the original power of attorney and fee agreement to verify their validity.
5. Characterising legal representation as optional
   Argument that hiring a lawyer is a voluntary choice and that the claimant could have represented himself; therefore, attorney fees should not be treated as compensable damage.

6. Case progression

The case was heard in several remote hearings before the Fourth Circuit of the Riyadh Commercial Court. The parties exchanged memoranda and submitted documents including:

• The fee agreement,
• Execution documents from the original case,
• Bank transfer records.

After closing arguments, the circuit reserved the case for deliberation and judgment.

Question 3: What did the court decide, and what judicial rule can be derived?

1. First-instance judgment of the Commercial Court

Proved procrastination and abuse

The Fourth Circuit of the Riyadh Commercial Court held that the claimant’s right to the amount awarded in the original case was firmly established by a final judgment, and that the defendant’s conduct amounted to procrastination and abuse of right because the claimant obtained his due only through litigation and after exhausting judicial remedies.

Sharia basis for liability for delay-caused damage

The court cited the opinions of Ibn Taymiyyah and Al-Mardawi that if a debtor procrastinates until the creditor is forced to complain, what the creditor spends because of that is borne by the procrastinating debtor, within customary limits. The court treated the attorney fees claimed as such damage.

Assessment of compensation at 10% of the awarded amount

Exercising its discretionary power and guided by prevailing custom, the court decided to assess compensation “in a reasonable and customary way, without excess or shortfall”. Considering the effort in the original case, it fixed compensation at 10% of the amount awarded (SAR 2,353,550), i.e. SAR 235,355, and rejected the remainder of the claim.

Operative part of the judgment

The judgment ordered the defendant to pay the claimant SAR 235,355 as compensation for attorney fees and litigation damage arising from the defendant’s delay in paying the price of the sheep.

2. Appellate judgment

Both parties appealed: the defendant challenged the finding of procrastination and complained that the court had not set out objective criteria for assessing the effort or the percentage; the claimant requested an increase to the full claim amount (about 15%).

After examining both appeals, the First Circuit of the Commercial Court of Appeal in Riyadh:

• Accepted the appeals procedurally as timely; and
• Upheld the first-instance judgment on the merits, relying on provisions of the Commercial Courts Law that allow the appellate court to affirm a judgment “carried on its reasons”.

Question 4: What are the implications of this judgment for the firm’s clients and how can it be used in practice?

1. Confirming the debtor’s liability for litigation damage

The judgment sends a strong message: unjustified denial of debts and deliberate delay in payment are not cost-free. A procrastinating debtor may be ordered to pay part of the creditor’s attorney fees in Saudi Arabia, in addition to the principal debt. This encourages better contractual behavior and incentivizes early settlement.

2. Importance of structuring the attorney–client relationship and fee agreement

In practice, companies are advised to:

• Conclude a clear written fee agreement with legal counsel, defining scope of work, fee percentage or amount, and method of payment and any agreed deduction from collected sums.
• Preserve evidence of what has actually been paid, such as execution cheques, bank transfers, and account statements.

Courts tend to look at actual, customary expenses, and are reluctant to award compensation for inflated or undocumented fees.

3. Using a percentage as a flexible benchmark

The precedent confirms that Saudi commercial courts may use a percentage of the claim or awarded amount as a practical benchmark when compensating attorney fees.

However, the court is not bound by the percentage agreed upon between client and lawyer; it will award what it considers fair in light of:

• The value of the dispute,
• The complexity and duration of proceedings,
• Prevailing market practice.

4. Distinguishing between the original claim and the compensation claim

From a strategic perspective:

• It is generally preferable, where possible, to request attorney fees in the original lawsuit under the rules governing litigation costs.
• Nevertheless, this precedent shows that courts may accept a separate compensation claim where damage from delay is proven and the claim is brought before the same circuit that rendered the original judgment, in line with jurisdictional rules.

5. Practical impact on companies

For companies in sectors such as trade, food supply, livestock, construction, and franchising, this judicial trend can be leveraged by:

• Including contractual clauses that address allocation of litigation costs and provide that part of the attorney fees will be borne by the breaching or procrastinating party.
• Adopting internal policies that clarify when litigation should be initiated, how to estimate expected litigation costs, and to what extent some of these costs may be recoverable in light of recent case law.

Services of the Law Office of Arbitrator and Attorney Mohammed Almuzayen in Attorney-Fee and Litigation-Damage Cases

• Drafting and reviewing attorney-fee agreements and commercial contracts, ensuring a clear framework between the company and its counsel and enabling reliance on such agreements in litigation-damage claims.
• Issuing legal opinions on: the viability of compensation claims for attorney fees in Saudi Arabia, the existence of legally recognised “procrastination”, and expected ranges of compensation in light of judicial trends.
• Representing companies before commercial courts and appellate circuits in claims for principal commercial rights (debts, contract performance, etc.), and claims for compensation for attorney fees and litigation damage resulting from delay or abusive conduct.
• Managing structured settlement negotiations, taking into account the original debt value, potential litigation costs, and the possibility of lawfully incorporating part of the attorney fees into a final settlement.

Legal Consultation

For a tailored legal consultation on attorney fees in Saudi Arabia, litigation damage, or review of your position before filing a compensation claim, entering into a fee agreement, or commencing commercial litigation, you may contact the Law Office of Arbitrator and Attorney Mohammed Almuzayen to assess your documents and recommend the most appropriate course of action.

Frequently Asked Questions (FAQ)

1. Can the winning party recover all its attorney fees from the losing party?

Not necessarily. Saudi commercial courts have wide discretion. They typically award a reasonable portion of the actual fees or a percentage of the claim value, especially where procrastination or abuse of right is proven.

2. Is a written fee agreement required before the court can award compensation?

A written fee agreement significantly helps in proving the amount paid, but it is not the only requirement. The court looks at actual damage, prevailing custom, and the effort expended, and may use a percentage-based assessment even if the agreement is disputed.

3. Can a separate lawsuit be filed for compensation after the original case ends?

In light of this precedent, it may be possible to bring an independent claim for compensation, provided it is filed before the same circuit that rendered the original judgment and the damage arises from delay before execution. However, each case should be assessed individually, and in some situations the court may find that the compensation request should have been raised in the original lawsuit.

4. What are the risks of not having a written fee agreement?

Absence of a written agreement can lead to difficulty proving the amount of fees paid, disputes between client and lawyer over what constitutes a fair fee, and reduced chances of recovering the full amount claimed as compensation. For that reason, a clear, detailed written agreement is strongly recommended.

5. When is it advisable to seek legal advice before claiming attorney-fee compensation?

It is advisable where there is clear delay by a debtor in paying a due commercial debt, attorney fees are substantial compared with the claim value, the fee agreement contains unusual terms or alterations, or a judgment has already been issued in the underlying claim, and you are considering a separate compensation action.

Text and Data of the Judgment (Expanded Summary)

Original lawsuit: Commercial claim for the price of sheep amounting to SAR 2,353,550, case no. 42802647, which ended with a final judgment ordering the buyer to pay the full amount after he denied part and acknowledged only SAR 889,000.

Current lawsuit: Claim by the creditor requesting that the debtor be ordered to pay approximately SAR 353,032.50 as attorney fees incurred in the original case, on the basis that the debtor procrastinated and forced him to litigate.

Defendant’s arguments: Denial of procrastination, assertion that the fee agreement binds only the lawyer and client, challenge to the integrity of the contract, and reliance on procedural rules said to bar an independent claim.

First-instance outcome: Confirmation that the claimant’s right in the original case was established after procrastination by the defendant; treatment of attorney fees as compensable damage within customary limits; assessment of compensation at 10% of the amount awarded in the original case, i.e. SAR 235,355, with the remainder of the claim rejected.

Appeal: The defendant appealed, contesting procrastination and the methodology of assessment; the claimant appealed, seeking a higher amount; the Commercial Court of Appeal upheld the first-instance judgment, carried on its reasons.

Judgment data

• Type of case: Claim for compensation for attorney fees and litigation damage in a commercial dispute.
• Court (first instance): Commercial Court in Riyadh – Fourth Circuit.
• Case number: 4470265121 for the year 1444 AH.
• First-instance judgment number: 4430811053.
• Date of first-instance judgment: 19 Ramadan 1444 AH.
• Court (appeal): Commercial Court of Appeal in Riyadh – First Circuit.
• Appellate judgment number: 4430811053.
• Date of appellate judgment: 16 Rabi‘ al-Awwal 1445 AH.
• Final operative disposition: Upholding the order requiring the defendant to pay SAR 235,355 to the claimant as compensation for attorney fees, carried on the reasons of the first-instance judgment.

Conclusion (Summary of the Article)

This judicial precedent illustrates a clear trend in Saudi commercial courts towards shifting part of attorney fees in Saudi Arabia onto a procrastinating debtor when delay and abuse of right are established. The courts rely on Sharia maxims, statutory rules and commercial custom to treat reasonable attorney fees as compensable damage, often expressed as a percentage of the awarded amount.

For companies and business owners, the key practical messages are the importance of organizing fee agreements and financial documentation, factoring litigation costs into risk management, and seeking specialized legal advice before making major decisions about litigation or settlement.

Related Articles

• Article titled: Attorney’s Fees Compensation Claim in Saudi Commercial Courts

Short Descriptive Summary

This article analyses attorney fees in Saudi Arabia through a detailed reading of a judgment issued by the Commercial Court in Riyadh, in which a procrastinating debtor was ordered to pay 10% of the adjudged amount as compensation for the creditor’s attorney fees. It explains the Sharia and statutory basis for treating reasonable legal costs as compensable damage, summarizes the reasoning of the first instance and appellate courts, and highlights the practical implications of this judicial trend for companies and traders operating in the Saudi market.